Aug 10, 2021 - Economy

Fed watch: July jobs report means talking about tapering sooner

Picture of Atlanta Fed president Raphael Bostic

Atlanta Fed president Raphael Bostic; Photo: Elijah Nouvelage, Bloomberg via Getty Images

Federal Reserve officials say Friday’s blockbuster jobs report supports the case for tapering supportive monetary policy relatively soon.

Why it matters: With the economy progressing, everyone wants to know when the Fed will taper its quantitative easing program and eventually start hiking interest rates.

What they’re saying: Atlanta Fed president Raphael Bostic told reporters on Monday that the jobs report was "definitely quite encouraging."

  • He said he thinks the Fed could begin tapering QE sometime in the "October-to-December range," but added he would be "open to moving it forward" depending on the strength of upcoming jobs data.
  • At another event, Richmond Fed president Thomas Barkin said there was "still more room to run in the labor market."
  • But Barkin, as well as Bostic, believes that inflation is at a level that meets the requirement for tapering QE.
  • Bostic and Barkin are both voting members of the Fed’s FOMC policy-setting committee.

Meanwhile, Boston Fed president Eric Rosengren — who is not a voting member of the FOMC — took on a slightly more hawkish tone, telling the Associated Press that the economic data already supports the Fed announcing in September that it would start tapering QE "sometime this fall."

What to watch: The August jobs report will be released on Sept. 3. Another robust report could tilt more FOMC members toward announcing the taper sooner. But it remains to be seen how the spike in COVID cases is affecting hiring.

The bottom line: The economy has indeed made a ton of progress on the labor market front, and the inflation data has been trending above the Fed’s 2% average target. Whether it’s in September, October, November or a little later, most seem to agree that the trajectory of the economy supports a tapering announcement in the next few months.

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